Jack Ellis

Xiaomi has acquired a significant portfolio of patents from Intel in what looks to be the Chinese company’s most significant IP acquisition to date.

In an assignment dated to 4th February and recorded with the US Patent and Trademark Office four days later, the California-based semiconductor giant transferred ownership of 332 US patents to an entity named Beijing Xiaomi Mobile Software Co, Ltd, which shares an address with Xiaomi’s corporate headquarters in Beijing.

The portfolio appears to cover a broad range of telecommunications, electronics and software-related technologies. Most of the transferred patents were originally assigned to Intel; a fair few had initially been owned by fellow US chipmaker LSI. In August 2014, Intel purchased LSI’s former networking business from Avago, which had earlier acquired LSI in a $6.6 billion deal.

Coincidentally, Broadcom – as Avago is now known following a $37 billion merger last year – has transferred a number of patents to Xiaomi in recent months. Those deals were the first known examples of the Chinese company obtaining third-party patents in what looked to be the beginning of a long-anticipated and long-promised drive to beef-up its IP position. However, in terms of the quantity of acquired assets alone, the Intel transaction would seem to be even more strategically significant.

Intel’s assignment of patents to Xiaomi follows rumours that the two companies had struck a deal over the supply of microprocessors – an issue that has proved to be of particular concern to the Beijing-based start-up. According to anonymous sources reported by DigiTimes, Intel has offered to give away one of its Atom processors – which power Xiaomi’s Tablet 2 – with every one of its new Core chips that the Chinese company buys for its upcoming range of notebook computers. To put it another way, Intel is throwing in a freebie to retain Xiaomi as a customer and ensure that its technology is present in some of the Asia-Pacific’s best-selling consumer electronics products.

As IAM’s readers will know, something else that Xiaomi is in desperate need of – apart from affordable, high-quality microchips – is patents. It may well be the case that Intel agreed to throw in a sizeable portfolio of patents to sweeten the deal and to get Xiaomi signed on the dotted line. Intel is far from being short on patents; research from MDB Capital Group published in issue 71 of IAM revealed the Californian company to own 24,306 US-issued patents, giving it the seventh-largest portfolio of in-force US assets. Intel is also building a strong showing in Chinese patents, having been the sixth most prolific non-resident filer of applications at the country’s State IP Office last year.

Intel has been particularly active among US companies in trying to penetrate China’s semiconductor-related markets. In early 2014, it entered into a strategic partnership with Chinese fabless outfit Rockchip; later that year, it invested $1.5 billion to take a significant stake – alongside Chinese state-backed vehicle Tsinghua Unigroup – in the holding company that owns domestic chipmakers Spreadtrum and RDA.